Playbook for early-stage growth
Practical advices to navigate the seemingly-chaotic early-stage growth
Growing from 0 to 1 requires different strategies and expertise compared to growing from 1 to 10. Some people are good at the former, and some people are good at the latter. Few people are good at both, and that’s precisely why this article is written.
I was an early employee at CoLearn. As the growth manager, I was responsible to lead CoLearn’s multiple growth efforts to go from 0 to 4 million students nationwide in 8 months after launch. I reported directly to the CEO and was in collaboration with designers, writers, social media managers, and analyst.
It was super challenging, fulfilling, and an experience worth sharing to everyone who looks to embark on a similar journey (in early-stage startup). I understand how challenging it can be and I intend to help you navigate the obstacles ahead.
It’s important to keep in mind that there might be other ways to grow in the early-stage. What I aim to achieve is not to give you a one-size-fits-all framework. It’s about offering some structure to the seemingly-chaotic early-stage growth and helping both founders and managers to navigate the incoming obstacles the right way. It’s all about preparation.
Who this is for
Company type: This article is the most ideal for B2C / D2C startup in pre-series A stage. However, some of the frameworks can be used for B2B sector and series A startups as well.
Role type: This playbook is useful for founders, C-levels, or growth/marketing managers who either have experience in larger companies or those that have no experience at all (like I did). Knowing what lies ahead can help you prepare before the storm.
Early-stage growth poses very different challenges that those with experience in larger organizations might struggle with. I know plenty of professionals with 5-10 years experience that blatantly admitted that early-stage is not their cup of tea. Here are some reasons why:
Limited resources. Early-stage growth adopts a “earned, not given” mindset. Before you can request for more money for media placement and hiring, you need to score early wins to prove that you know what you’re doing. Earned, not given.
High pressure. Another reason why early-stage can be super challenging is the high pressure due to a very small margin of failure. One failure can be lethal. Your growth numbers might lead to a do-or-die situation. See good traction, and investors will get FOMO. Bad traction, you might end up with just 3 months of runway.
Extreme micromanagement. Since one failure can be critical, you might receive an extreme level of micromanagement from your direct report (which more often than not, might be the CEO themselves). Rather than trying to avoid it, you should learn to embrace it.
High uncertainties. You don’t have a lot of data to begin with. You might not have any data at all. This means there are a lot of unknown variables that might not only jeopardize your strategy, but the company overall. The earlier the stage, the higher the risk is.
In short, it’s not so much about ability as much as it is about being mentally prepared. It’s not enough to have the knowledge if you can’t deal with the dynamic. Given the challenges, I typically break up this framework into 4 steps:
Step 1: The right person for the role
Step 2: Alignment on goals & expectation
Step 3: Figure out your growth marketing strategy
Step 4: Measure to improve
Step 5: Figure out your growth loop
Step 1: The right person for the role
As I explained, early-stage growth is a different kind of monster. It’s very important to have the right person for the job. For founders, it means hiring the right person. For growth managers, it means doing a self-assessment whether you’re up for the challenge.
There are many talents out there that might have excelled at their previous growth roles, making it very tempting to hire for pedigree (experience in big companies, degrees, and years of experience). However, succeeding at early-stage growth requires a set of traits that are harder to measure: willingness to learn and comfort level with uncertainties.
Succeeding at larger organizations doesn’t always translate to success at early-stage. Hiring someone who excelled at Tokopedia in 2018 might make sense for a 3 years old startup since the situation and the complexities are similar. But they might not thrive in a condition where they have to throw away their entire playbooks that made them successful (new startup = so many unknowns = no proven theories). They might not deal well working with a first-time founder who micromanages yet knows so little about growth and marketing. They might feel entitled to more resources since day 1.
Instead of hiring for pedigree, hire for these 5 qualities:
Hunger — someone that has something to prove naturally is more ambitious and has higher willingness to learn. They will go beyond to keep improving.
Fast learner — A machine at absorbing and implementing new knowledge. Usually someone with a strong logical thinking.
Bias for action — Less time on thinking and more time spent on trying out new things. When there are a lot of unknowns, speed is the only moat.
High risk appetite — Early-stage means high risk and higher upside. Higher risk appetite is important to weather the storm. They are naturally calm during a time of chaos, and calmness brings clarity.
Strong communication skill — In early-stage, you will try many things and fail many times. It’s important to hire someone that can communicate during the good times and over communicate during the bad times.
For individual contributors/managers
You understand the challenge. You can imagine the unknowns. It’s time to do an honest self-assessment of whether you’re the right person for the role. You’re the right person for the job if…..:
You can tolerate more risk
You want to accelerate your career
You’re pretty comfortable with uncertainties
You consider yourself to be a fast-learner
You want to challenge yourself
You’re passionate about startup and growth function
You thrive under pressure (or want to learn to)
Work-life balance is not a priority (unfortunately….)
You don’t have a sense of entitlement due to your previous success
Likewise, this role might not be for you if…..:
Uncertainties makes you uncomfortable
You highly value stability / routine
Work-life balance is an important thing
You prioritize financial security over financial upside
You prefer to do what you’ve learned/understood rather than trying out new methods
You expect to be given more resources since day 1
You prefer strategizing and managing people rather than being in the trenches / getting your hands dirty
As with any list, you’re not expected to check all the boxes. What you’re expected to do is to do an honest assessment based on this criteria whether you want this role and whether this role wants you. Know what you get yourself into, know where the gaps are, and put in the efforts to make up for it.
Step 2: Alignment on goals & expectations
In early-stage growth, speed is the only moat. Speed is only possible with alignment on the objective and the expectation. Otherwise, it can get ugly. Let’s break it down on 2 types of alignments.
Early on, the objective should be to see if your product has traction, not growth explosion. This means paying attention to whether there is a product-market fit and product-channel fit. But even then, getting traction still requires traffic, albeit at a smaller scale. When setting early objectives, cross-department collaboration is required.
For PMs and ops team, it might be about customer’s love (PMF)
For growth team, it might be figuring out the right distribution channel, which might be measured by the CAC and the retention rate of each channel
Ultimately, this is the founders’ job to collaborate internally on the right target / metric for each team. The common goal-setting mistake in early-stage growth is founders promising a target to investors without first discussing with the internal team.
Discussing goals is important, but discussing constraints and managing expectations are just as important. There are so many unknown variables in the early days, and a lot of things can go wrong. In the early days, most internal debacles can be anticipated with setting and managing expectations. Most people are pressed because they’re caught by surprise. Therefore, the only way to counter it is by eliminating (or minimizing) the element of surprise.
Based on my experience, here are some of the things that I wish I knew:
Traction before scale — Scaling too fast is rarely a good sign. Rather than expecting explosive growth in the early days, it’s better to figure out the key to traction. Scaling up when you have better traction can improve your retention, lower the cost to acquire, and strengthen your brand.
Paid channels have its own limits — Most organizations see growth in silos. What ends up happening is: PMs build the feature, and Marketers are responsible for the user growth. This is a costly mistake. If product-led growth is not an option, then growth marketing / paid channel is the only way. The thing about it is that every paid channel has their own lifecycle, and they are not getting any cheaper. This leads to another point….
Invest in product-led growth — It’s hard for most early-stage companies to see the value in product growth. It doesn’t scale quickly, and the benefit takes time to materialize. But it’s the only way to create enduring growth. If you have good traction, most likely growth marketing will yield the majority of your growth. But as I mentioned, it’s not sustainable. Therefore, while you enjoy the fruit of paid channels, make sure to build your organic growth engine. Do things that don’t scale.
Prepare for tech outage — It’s not uncommon for an app to go through a tech outage during a huge traffic spike. In fact, I believe that almost every successful product has gone through this at least once if not more. That being said, that doesn’t mean that one shouldn’t prepare for such a case. Traffic spike in the early days can be due to external factors, like influencers posting about your app and it goes viral. When it happens, having a tech outage is not exactly a good first impression for new users.
Step 3: Figure out your growth marketing strategy
Product-led growth is obviously more organic, but the thing about product-led growth is that it needs fuel to make the engine rolling. That “fuel” is traffic / users. This is where growth marketing will come in handy for your initial growth phase.
However, growth marketing can also be tricky when you have no historical data. Luckily, there are ways to make this whole process more science-driven than luck.
Understand your product — Have a deep comprehension of how your product will be used by your target audience. This analysis covers 5 key questions:
What problem does it address?
Who is it for? Who isn’t it for?
What are the available alternatives?
Why your product over the alternatives?
When do customers consider buying/using your product?
Channel evaluation — Let’s say you have 10 growth channels you can use. However, with the limited budget, it’s hard to experiment in all 10 channels and get sufficient learning. This is where channel evaluation comes in handy. Channel evaluation uses 8 factors to evaluate a channel based on your product’s use case and your resource limitation. I wrote about this in detail here.
Channel Prioritization — By this step, you should have a smaller list of growth channels you want to try. But even then, you will still have to prioritize. There are 2 types of channel categories you should be focusing on:
“Quick payback period” channel: Channels that has the higher likelihood of success and can give the quickest result
“High-upside” channel: Channels that might not give instant results right away, but have huge potential and therefore worth experimenting on.
Budgeting — Knowing those 2 channel categories, budgeting is all about aligning with stakeholders’ expectations.
If you are chased by ambitious targets & small margin for failure:
“Quick payback period” channel: 80-100%
“High-upside” channel: 0-20%
If you have short-term target while also being expected to grow sustainably in the long run:
“Quick payback period” channel: 60-80%
“High-upside” channel: 20-40%
If you have a conservative short-term target and is more expected to grow in the long run:
“Quick payback period” channel: 50-60%
“High-upside” channel: 40-50%
Evaluation — This sounds obvious, but evaluate things frequently. Evaluation is a lot more than measuring your campaign’s performance. It includes many other things:
Adjust — adjustment is not just about strategy, it’s also about target, constraint, and expectation
Communicate — Communicate those adjustments sooner than later. Have a cadence on doing such things. The more frequent, the better it is due to small margin of error.
Learn — With so many unknowns, you will find a lot of things to be quite different from what you expected. Make sure to document those learnings and use it to plan better. Back then, I had a sheet that contained all of my assumptions about growth that I learned elsewhere, and recorded it whether it’s true or not. This helps accelerate my learning curve and most importantly, it allows me to develop my own mental model.
Step 4: Measure to improve
If you’ve made it this far, congrats, doing this is not easy at all and you’re just getting started.
By now, you’ve probably had some ideas about which channel worked, and which one didn’t. Maybe you have a low customer-acquisition cost in one channel and you’re thinking of ditching all other channels. While it’s good to react quickly, make sure you don’t overreact. There are more metrics that you need to pay attention to before making such decisions.
While you figure out your early-days acquisition, don’t forget to pay attention to other things, such as….:
Pay attention to retention — Categorize your app’s retention by acquisition channel and by user category. Divide retention into two categories: activation and engagement. Understand the in-app behaviors that correlate to deep engagement.
Know your power users — Understand the pattern among your power users and use that to further refine your growth strategy. Patterns for your power users can be defined into two types:
Pre-registration attributes — example: location, OS/phone brand, gender, acquisition channel
Post-registration attributes — example: engagement in the first 7 days
Anticipate for churn — Like Thanos, churn is inevitable. The best thing you can do is to be aware of it and anticipate.
Know the difference between non-activated users, dormant users, and at-risk users
Identify resurrection opportunities for non-activated and dormant users
Identify preventive measures for at-risk users
Step 5: Figure out your growth loop
All the metrics-to-measure that I explained in the previous point are not for nothing. It’s to prepare you to step up your growth game to the next level: growth loops.
Growth marketing is great for a start, but it’s not sustainable. The only way you can sustain your growth is by having growth loops where its output can be reproduced into another input. Think of a snowball, or law of compounding.
There are plenty of resources that discuss about growth loop. Reforge laid out the foundation of what growth loop is all about. Marketing Examples explained about 5 types of growth loops. These articles are very good to get you started, but not all growth loops are created equal. Some growth loops are more powerful than others. Ultimately, when it comes to creating the right growth loop for your product, you should go through these steps:
Look at the data — Number is not everything, but understanding the behavior of your power users and figuring out the reason for them to share is a damn good place to start thinking about your growth loop.
Observe & be creative — More often than not, the right growth loop for your product might not even exist in your product yet. That’s why it’s important to observe & be creative. I’d argue that this step is more important than looking at the data. Unlike doing optimizations, anecdotal insights might be very useful in this case.
Test & learn — Ideas can look good on paper, but eventually it will have to be tested. Notice that I said “test & learn” and not “measure”. Some product growth ideas can be quite hard to measure quantitatively. For example, Gojek’s growth loop in the early days was the green jackets being used by their drivers anywhere anytime. Measuring this isn’t as simple as measuring user growth from a content-sharing feature.
Copy-pasting this just in case: It’s important to keep in mind that there might be other ways to grow in the early-stage. What I aim to achieve is not to give you a one-size-fits-all framework. It’s about offering some structure to the seemingly-chaotic early-stage growth and helping both founders and managers to navigate the incoming obstacles the right way.
It’s all about preparation.
Know anyone who might benefit from this article? Share this post and help them become better at evaluating marketing channels.